Oil falls on increased u s rig count china industrial slowdown

A interesting combination of factors affecting the oil market!

Here's a breakdown of each factor:

Increased US Rig Count:

• The US rig count has been increasing steadily since June 2020, driven by higher oil prices and improved profitability for oil producers.
• According to Baker Hughes, the US rig count reached 743 in the week ending March 12, up from 555 in the same week last year.
• This increase in drilling activity is expected to lead to higher oil production in the coming months, which could put downward pressure on prices.

China Industrial Slowdown:

• China's industrial production growth has been slowing down in recent months, driven by a combination of factors such as:
  • COVID-19 lockdowns and restrictions
  • Economic uncertainty and trade tensions
  • Decreased demand for industrial goods
• According to China's National Bureau of Statistics, industrial production growth slowed to 5.6% year-over-year in February, down from 6.9% in January.
• A slowdown in industrial production in China, the world's largest oil consumer, could lead to reduced demand for oil and put downward pressure on prices.

Oil Price Impact:

• The combination of these two factors could lead to a decrease in oil prices.
• The increased US rig count is likely to lead to higher oil production, which could put downward pressure on prices.
• The slowdown in China's industrial production, on the other hand, could lead to reduced demand for oil, also putting downward pressure on prices.
• The net effect of these two factors could be a decrease in oil prices, potentially offsetting some of the upward pressure from other factors such as OPEC+ production cuts and global economic growth.

Current Oil Price:

• As of March 15, 2023, the Brent crude oil price is around $65 per barrel, down from its recent high of over $70 per barrel in February.
• The WTI crude oil price is around $60 per barrel, also down from its recent high of over $65 per barrel in February.

In summary, the increased US rig count and China industrial slowdown are both bearish factors for oil prices, which could lead to a decrease in prices in the coming months. However, other factors such as OPEC+ production cuts and global economic growth could still support oil prices.